Lessons Learned From My Time Running a Web Agency

I have never written extensively (or really at all) about my time as a web agency owner. Partly because I’ve never been a boaster, partly because it wasn’t all fun and glory—but mostly because it’s in my past and something I’ve been moving on from.

I make it sound great, don’t I?

There were phenomenal aspects to running a web design shop. I miss the days of being in complete control of projects, from the client kick-off meetings to designing and developing websites to managing meaningful relationships with small, local businesses. Those are the awesome parts of running a web agency. You help others grow their businesses and organizations, and you can see the direct impact your work has on your local area.

However, behind all that devotion is a business. And a business can be a nasty beast, waiting to claw at your heels. As a sort-of long-procrastinated post-mortem, I wanted to highlight some of my key takeaways from running that business.

Lesson One: Client relationships really are the bread and butter of a business

My company started as a small-time, directionless business in the early 2000s. It was really my friend, a school buddy of mine, who greased the gears of the new business, with both of us riding the choppy waves of the web hosting explosion during the dot com bubble. With not much to show from those ups and downs, it took us many failed ideas and pivots to land on such a basic business: building and designing websites for local businesses.

Finding clients and establishing a reputation in your late teens and early twenties is quite a mountain to climb. With little experience, we decided the best place to get started was the nearby Chamber of Commerce.

For those unfamiliar with the concept of a Chamber, it’s an organization that exists to bring small (and large) businesses together via networking opportunities, while promoting pro-business agendas. It was the perfect environment for two rail-thin, gawky twenty-something-year-olds to start courting new clients.

At first, the progress was painful. Attending networking events is not my forte. Strangers scare me, and worse, talking about what I can do for strangers sends goosebumps down my arms. Thankfully, my business partner seemed more of a networker than me, so I left the schmoozing to him.

It took months to start seeing dividends from all those “After Hours” meet-and-greets and speed networking luncheons. First, it was small website projects that barely seemed worth it, but then something happened. People began to recognize us. They trusted us. We weren’t those weird, pale nerds anymore—we were respected businessmen who were showing results.

Keeping with the Chamber was pivotal for the business. The more face-time my business partner put in, the more our reputation grew. He volunteered to help the Chamber, cultivated relationships, and gave back to the community. And with me back at the office, pumping out work, I realized that being responsive to clients and making them part of the process was just as critical.

Relationships matter in a big way. Starting a business requires creating new connections that must be maintained over time. It’s not a sprint; it’s a marathon. And providing good customer service through the duration of a project—before, during, and after—is the key to recurring business and referrals.

We did almost no outbound marketing for our web design business. It was all networking, managing relationships, and trusting that those relationships would bear fruit in the forms of either new work or new referrals. It worked, and it built our business into one of the largest web design agencies in the area.

Lesson Two: It’s easy to fall behind on industry knowledge

Running the operational aspects of a business was an eye-opening, educational tidal wave. During the height of the company, I was also earning my business degree. At night, I was learning the theory of business, and in the day, I was actually gaining street smarts. The business was teaching me more than my degree ever could.

Key lessons included learning how to communicate with people of all backgrounds via telephone (gulp), email, and various project management systems. We brought on interns and employees that needed direction. New processes and plans were written, enacted, and evolved. Finances were tracked and reports printed out for scrutiny. We even attracted an investor who we eventually bought out. These were all real-life experiences that built a foundation for me that has served me with purpose throughout my career and personal life.

In short, starting and running a business imparts an incredible amount of lessons and knowledge, and a good helping of modesty.

Despite these critical learning experiences, I still managed to find my industry knowledge lacking. When the time came for me to leave the business, I made my first foray into the job market to see what sort of skills were desired. Thinking my experience of running a business was all I needed, I was shocked to see how far behind my technical skills were in comparison to job requirements.

I spent months catching up on my technical knowledge gap, thanking the stars I hadn’t fallen perilously behind.

This is an area I failed in during my time as a business owner. I was lazy with technology. Comfort was easier. For example, it took several project hiccups just to realize WordPress was necessary to manage content for client sites. Worse, I ignored new development tools and methodologies with the justification that I didn’t have time.

I now remind myself constantly to keep an eye on the industry. I always look at job postings to see what employers desire in candidates. And I keep my skills fresh by making an effort to develop side projects and by forcing myself to try out new things in my freelance work.

Lesson Three: Financial decision-making will make or break you

Accounting is a mind-boggling subject. I took two accounting courses during college along with a financial class. The rules, formulas, and scenarios are all enough to leave you hating money.

Real-life business is not much different. To run a business that works, the financial machinery must be well-oiled, documented, and systemized. If you can’t pull a balance statement immediately or see what receivables are outstanding, then you’re in for a world of hurt.

Thankfully, my business partner was more or less on top of our company’s financials. I regret not putting in more effort to understand the finer details of cash flow and depreciation, but on the whole, we were doing pretty good with our books.

Understanding your money is probably the most essential part of business and life (operationally speaking). I can’t emphasize that enough. Every dollar must be accounted for, and cash flow must operate in a manner that you can expect to pay your bills and meet payroll each month. These things kill companies all the time. And they put people out of work.

The key is automation. We’re in a fortunate era where computers can tackle most of the number-crunching for us. QuickBooks Online was our saving grace, the tool that could spit out our financial statements with the click of a button. Adding the data and rules to get those statements to make sense is the difficult part. Spend the time to systemize your accounting correctly. Know where your money is going. And understand when an expense is and isn’t necessary.

With essential financial information at our fingertips, making financial decisions was less burdensome. We either had the money or we didn’t. However, it didn’t stop us from making stupid choices. We spent $2,000 on a magazine ad that resulted in zero leads. We shelled out thousands upon thousands for office space we didn’t need. We were young and stupid, and it’s those dumb decisions that have taught me my greatest life lessons.  

Lesson Four: Build recurring revenue streams

Operating on a project-by-project basis is a brutal model. We were constantly on the hunt for our next client, hoping we could land a project big enough to meet our monthly targets.

It was this business model that kept me up at night.

Would we get that client? What would happen if projects dried up?

This is why I’m a huge fan of the recurring revenue model. This is not a new thing. The Software as a Service model sprung up years ago and has paved the way for many million-dollar ideas. But when we were in the prime of our business, this model was just taking off.

Ramping up our hosting and web maintenance products, and turning them into recurring streams, is what doubled the size of our business. We knew how much cash we’d bring in, and we knew how to sell these products with ease. We even created a proprietary content management system to help clients manage their online media rooms. Granted this wasn’t the most unique concept, it still produced recurring revenue for our business.

Recurring revenue is a critical financial lesson—not just in business, but in personal life as well. Relying on multiple sources of income diversifies and reduces risk. This is why I always recommend freelancing outside of work, taking on secondary jobs, and making smart investment decisions. 

Lesson Five: Partnerships can be a disaster

So what happened to this seemingly incredible business I was running? Why am I now employed by another company?

A big reason was the partnership factor. Having been in business with my friend for nearly a decade, our two paths began to diverge—and in a big way.

With my business partner spearheading the business development side of the company, I relied on him to get us clients. And when our revenue began to plateau, I blamed him. “Where are the clients?” I’d ask in a heated tone. “What do you do around here?”

The relationship had turned sour. My trust and respect for my business partner had eroded, and that’s a hard path to turn back from. I held on for over a year, knowing that I needed to leave and strike out on my own. That’s when I learned that sometimes you just have to listen to your gut. And my gut was telling me to get out.

But more importantly, I learned that partnerships can be dangerous, especially with friends involved. All too often, I hear of business partners separating, never to speak with each again. And I’ve lived it. It’s caused me to have less trust in people, and I’ve had to retrain my internal compass to be more accepting and understanding of others’ methods.

I’m not going to outright say to avoid partnerships. Sometimes they work out wonderfully. But I do caution against it. Choose who you run your business with carefully. Make sure you both can communicate, that you’re both mature enough to actually communicate (my business partner and I weren’t). And if it’s a partnership that you end up in, make sure you have the paperwork and planning to handle difficult decisions and potential exit strategies should a partner want to exit.

Conclusion: Be entrepreneurial

To be an entrepreneur does not necessarily mean you must be running a business. Entrepreneurship can be a way of life and thinking. It invokes the creative part of your brain and makes you ask yourself how you can make life better.

A business may follow that line of thinking. Or it may not. For me, running a business was a result of entrepreneurial spirit, and it’s that spirit that carried me through all those years of growth, stagnation, and eventual decline. That spirit grew, waned, and comes back in spurts—but it’s never left me. If anything, my sense of entrepreneurship has evolved, rooting itself in my decision-making.

I enjoyed my time as a business owner, and I hope to re-enter that world again. For now, my freelance work keeps me satisfied, especially since the only accountable person is me.

If you’ve ever desired to start a business—do it. The amount you’ll learn is worth more than the costs of any failures (unless you’re sinking in your entire life’s savings, I suppose). And hopefully, through starting a business, you’ll be able to grow and establish your entrepreneurial spirit.

See more posts